The Cost of Downtime

So far, 2010 has brought blizzards, ice storms, tornadoes, floods, earthquakes and volcanic eruptions — and now hurricane season has begun. But as daunting as such catastrophes are to business, human error poses an even greater threat because it is more likely to occur than any natural disaster.

What happens if a backhoe slices a T-1 line, a misconfigured router brings down your e-commerce site, or an aging accounting server fails? Such mishaps demonstrate the critical need for a business continuity plan that will keep the company up and running. To minimize risk and guard against data loss, it’s imperative to implement a disaster recovery strategy and support it with appropriate technology.

Measuring Risk

Formulating a business continuity plan, getting stakeholders on board, and purchasing and deploying equipment takes time and money. But consider the consequences of not doing so should disaster strike: downtime, diminished productivity, data loss and damaged customer goodwill. It can take years to build a business, but only minutes to ruin its reputation.

The average midsize company suffers 16 to 20 hours of network, system or application downtime per year, according to IDC, at an average loss of $70,000 per downtime hour. Tell that to stakeholders, and you’ll get their attention.

Calculating the cost of downtime goes a long way toward justifying investments in resilient, redundant networks, hardware and systems. For a ballpark estimate on labor costs, determine the number of workers who would be affected, how much they would be affected and the average employee-cost-per-hour for an outage. For revenue loss, factor in gross yearly revenue, total yearly business hours and the percentage impact for varying outage hours.

In the long run, the cost of investing in business continuity and conducting disaster drills can pay huge dividends. What’s more, many of the technologies that aid resilience and disaster recovery are ones that companies can benefit from on a daily basis. Desktop and server virtualization ease administration; network and systems management provide a cohesive view of the enterprise; and secondary connections can be used to replicate backup data to another site. That means you can immediately start to recoup a return on your investment.

Many of the technologies that aid resilience and disaster recovery are ones that companies can benefit from on a daily basis.

“You can look at business continuity as a cost or overhead to the business similar to an insurance protection policy, or you can view it as a business enabler,” says Greg Schulz, founder and senior analyst of the Server and StorageIO Group. “The choice is yours.”

Putting a plan to minimize downtime in place does take time and effort, but so do most things worth having. Should disaster strike, nobody in your organization will doubt for one second that business continuity was a wise use of company resources.

Maria Sullivan is vice president of business sales at CDW.

Cost of Downtime by Industry

The cost per hour of downtime is inversely proportional to the average number of downtime hours per year. That’s because companies with high-value operations tend to deploy technology and best practices to reduce risk.